America’s Most Innovative Cities

The United States has always prided itself as one of the most innovative countries in the world. In fact, patenting in a wide range of scientific fields has been on the rise in the U.S., according to a recent study by the Brookings Institution. Even better for the economy, these patents are more valuable and are originating in more areas than ever before.

While patents are coming out of more areas, only a handful of cities create most of patents in the U.S. According tothe study, more than half of patents are developed in just 20 metropolitan areas. Based on the data provided by Brookings, 24/7 Wall St. reviewed the 10 metropolitan areas with the most average patents per million residents between 2007 and 2011.

According to Jonathan Rothwell, associate fellow at Brookings Institution who co-authored the study, the most important criterion in determining whether a metro area produces many patents is whether the area is home to major research institutions, especially those with highly regarded programs in science, technology, engineering and mathematics (STEM). Rothwell pointed out that the metro areas where patents are granted tend to have high levels of attainment in STEM fields.

While the proximity of STEM programs appears to be critical, Rothwell noted that only 2% of patents are actually granted to people who work in university settings. Meanwhile nine out of 10 patents come from U.S. corporations. Instead of generating patents, these universities create workforces with the necessary skills to find employment or even start companies in the area.

Companies that file patents regularly such as International Business Machines Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ) dominate employment in many of these innovative metro areas. The top 100 patent owners account for one-third of all patent holders. Recently, patent growth has taken place in smaller companies focusing on fields such as software engineering, Rothwell said.

The effect that patenting has had on these metropolitan areas is evident. Economic growth in these areas occurred at faster rate than the national average between 1980 and 2010, according to the study. For instance, productivity, measured by gross domestic product per worker, grew 3.3% annually in San Jose, one of the most innovative cities, during those years, compared to 1.4% nationwide.

In addition, these areas generally have higher median household incomes, compared to the country as a whole. 24/7 Wall St. also found that likely is due to higher educational attainment and the availability of higher-wage jobs.

Rothwell explained that the success of cities that have a focus on innovation should send a message to planners. “It is maybe a warning to cities that have focused their public spending efforts and development efforts on things like stadiums and convention centers that are really about increasing consumption in the metropolitan areas but don’t really contribute to the fundamental capacity to create new technologies, inventions or industries,” Rothwell said.

Based on the data provided by the Brookings Institution, 24/7 Wall St. identified the 10 metro areas with the highest number of patents filed per million people between 2007 and 2011. For each of those metro areas, we reviewed the average number of patents granted annually during that period and the fields where these patents were produced. We also looked at the higher-education institutions in the metro areas with top-ranked science programs at universities, according to the National Research Council. The top employers in the region were noted to reflect what organizations were likely filing the patents.